The lead story in today's Washington Post foretells of the impending disaster should either the Bush or Obama administrations seek access to the second $350 billion tranche of the Trouble Asset Relief Program (TARP) "despite intense opposition in Congress," sources familiar with the discussions said.

House and Senate leaders, senior Bush administration officials, and Obama transition staff regard TARP II funds as essential in combating the worst depredations of the deepening recession. As the Post reports, "without the money, [they know] it would be nearly impossible to offer significant help for homeowners facing foreclosure, stabilize the financial system or jump-start the credit markets so more consumers and companies can get loans."

But without reforms substantially improving funding procedures and transparency, TARP 2.0 may be dead on arrival in Congress.

Under the TARP statute approved by Congress in October, one of the administrations must inform lawmakers that it seeks access to the second and final installment of $350 billion. Unless Congress passes a resolution rejecting the request within 15 days, the Treasury can begin to tap the funds. If Congress turns down the request, the president could veto the resolution and then the Treasury could proceed. The money would then be blocked only if Congress overrides the veto, which would require a two-thirds majority in both chambers.

The prospects of congressional approval for appear dim. Without intervening legislation reforming TARP, leaders are convinced that lawmakers would block release of the supplemental funds to the Treasury. "A majority of lawmakers in both parties are strongly resistant to giving more money to continue the program, Democratic leaders say, adding that a request from either administration is likely to be rejected, making a veto almost unavoidable."

So concerned are congressional leaders about the outcome of a vote on TARP 2.0, one congressional source told the Post, that "advocates of the plan are exploring whether there are enough votes in the Senate to sustain a veto." They are weighing the costs and benefits of the Bush administration submitting a request for the money to Congress, so it - and not the so-to-be-installed Obama administration - would sustain the political ignominy of a bruising defeat in Congress.

This course of action is enormously risky and just as gratuitous. An alternative strategy is at hand and, since time is of the essence, should be taken under consideration immediately.

The deepest and most intractable objections to TARP - in Congress and among the population at large - stem from the lack of transparency regarding how the funds have been used and distributed. House Financial Services Committee chair Barney Frank (D-MA) has introduced a bill setting aside $40 of the $350 billion for foreclosure prevention and mitigation. Frank's bill would also require institutions receiving funds to account for the use of the money.

These reforms, while welcome, may well be insufficient by themselves if sentiment in Congress toward TARP is to turn around in time. Members of Congress, taxpayers, and Americans in general want assurances that the Treasury Department has an articulable, defensible strategy in making its transactions and that taxpayer money is not being used for golden parachutes, dividends, stock repurchases, etc., that is, in ways not contemplated when Congress originally passed the TARP legislation. The lack of such assurances to date has bred broad resentment and distrust.

One way to address and remedy this uncertainty and stem the rising distrust would be to change the way TARP funds are allocated and disbursed and to provide greatly enhanced disclosure on this score. Rather than transferring enormous lump sum to financial institutions, TARP 2.0 could instead award funds on a "project finance" basis, which would introduce enhanced transparency and enforceability into the selection process and the use of funds:

1) invite financial institutions, automotive companies, municipalities, cooperatives, etc., to submit proposals for funding specific projects and purposes, e.g. , for interbank lending, consumer loans, distressed asset sales, mortgage foreclosure forbearance and modifications, acquisition financing, etc.;

2) require that